Crime Watch: February 5, 2013

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Six Sentenced to Prison in Florida for Federal Tax Crimes

Six individuals were sentenced to federal prison by US District Judge William P. Dimitrouleas for filing false claims for tax refunds, the Justice Department and the IRS announced February 4. 

On January 28, 2013, Penny Jones of Rigby, Idaho, was sentenced to 144 months in prison. Jones had pleaded guilty, without the benefit of a plea agreement, to conspiracy to defraud the United States and forty-one counts of filing false claims for tax returns. On that same day, John Michael Smith Jr. of Hidden Hills, California, was sentenced to thirty-six months in prison. Smith pleaded guilty to filing a false claim for a tax refund. According to court documents related to the plea, Smith had sought over $208,000, an amount to which he knew he was not entitled.

Defendants Michael D. Beiter, Jr., David Clum, Jr., Dale Peters, and Christopher Marrero were all sentenced February 1, 2013. All four were convicted following a four-week trial in October 2012 of conspiracy to defraud the United States with respect to claims and multiple counts of filing false claims for tax refunds.

Beiter was sentenced to 300 months in prison, which is to be served consecutively to a ten-year sentence he is currently serving for promoting a separate tax fraud scheme. Clum was sentenced to 293 months in prison. Peters was sentenced to 144 months in prison. Marrero was sentenced to 180 months in prison.

The evidence at trial showed that Jones, Beiter, Clum, Peters, and others operated a scheme to defraud the IRS out of tax refunds. The false return scheme operated under the name PMDD Services LLC, and, later, Forever Grace LLC. The false return scheme was nationwide, causing the filing of tax returns for at least 180 clients from thirty different states, requesting more than $160 million in fraudulent tax refunds. The defendants and clients of the scheme collectively filed more than 380 tax returns, mostly from tax year 2008 but also for other tax years. The tax returns falsely reported the amount of their personal debt obligations as both income and as federal tax withholding. The fictitious income and withholding was reported to the IRS on Forms 1099-OID.

According to the evidence at trial, the tax returns prepared as part of the scheme fraudulently claimed refunds in amounts specifically intended to allow the clients to pay off their mortgages, credit cards, student loans, and other personal debts. Clients paid $750 to have the defendants prepare a tax return reporting this fictitious OID income, and clients agreed to share 10 percent of their tax refund with defendants. The trial evidence also showed that defendants Beiter and Clum held seminars in Florida and Tennessee, respectively, in which they recruited potential clients.

The evidence at trial further established that most clients of the scheme did not receive the enormous refunds requested, but instead received substantial civil penalties. Those who did receive refunds were typically subject to collection efforts by the IRS.

In addition, the evidence showed that defendants Beiter, Clum, and Marrero recruited clients for the scheme. Clum also filed false OID tax returns himself. Peters was PMDD Services' information technology specialist, writing software and implementing computerized procedures to automate the process of preparing the fraudulent tax returns.

Separate from the 1099-OID scheme, Marrero was convicted of filing three false tax returns at three separate IRS offices on the same day. Each return requested a refund in excess of $80,000 based on nonexistent gambling income and associated tax withholding.

Previously, in a related case, a client of the scheme, Philip Butcher, pleaded guilty to filing a false claim for a tax refund. Butcher filed two tax returns reporting his loans as OID income and tax withholding, claiming tax refunds totaling $1,456,696.


Family Members Sentenced in $1.9 Million Stolen Identity Refund Fraud Scheme

Several family members were sentenced February 1, 2013, in the Middle District of Alabama for their involvement in a $1.9 million stolen identity refund fraud scheme, the Justice Department and the IRS announced February 4.

Barbara Murry, Veronica Temple, and Yolanda Moses each received a sentence of fifty-seven months in prison and ordered to pay restitution in the amount of $1,908,659. Douglas Murry received a sentence of twenty-four months in prison and was ordered to pay restitution in the amount of $142,038. Almetta Johnson received a sentence of eight months home detention. Lee Moses, Jeffrey Temple, and Courtney Johnson each received a sentence of probation.

On April 25, 2012, Barbara Murry, Douglas Murry, Yolanda Moses, Lee Moses, Veronica Temple, Jeffrey Temple, Almetta Johnson, and Courtney Johnson were charged in a multi-count indictment by a federal grand jury on a variety of charges relating to an identity theft and tax fraud scheme. According to court documents, between January 2006 and April 2012, the defendants and their coconspirators directed over 900 false tax refunds claiming in excess of $1.9 million to several bank accounts controlled by the defendants and their coconspirators.

The conspiracy consisted of two parts. First, the defendants received false tax refunds into their bank accounts and provided a portion of the funds to the third-party preparers. None of the defendants obtained the identities or prepared the tax returns in this part of the conspiracy.

According to court documents, the second part of the conspiracy centered on B & B Weaving Shop and B & B Tax Service. Barbara Murry owned and operated B & B Weaving Shop, located in Montgomery, Alabama. B& B Weaving Shop was located in the same building as B & B Tax Service. Barbara Murry's daughters, Yolanda Moses and Veronica Temple, ran B & B Tax Service. Veronica Temple and her sister, Yolanda Moses, obtained stolen identities from multiple sources. Veronica Temple, Yolanda Moses, and others filed false tax returns from both B & B Tax Service and their homes and directed the tax refunds to numerous bank accounts controlled by the defendants and their coconspirators. Veronica Temple, Yolanda Moses, and Barbara Murry recruited individuals, including Douglas Murry, to open bank accounts in furtherance of the scheme. Many of the identity victims were sixteen- and seventeen-year-old minors.


Justice Department Sues to Shut Down Tax Preparers in Maryland

The United States filed two lawsuits to shut down three tax preparers in Prince George's County, Maryland, the Justice Department announced February 4. One suit names Tonya Hubbard and her Lanham, Maryland-based tax preparation business, Universal Tax Service LLC, as defendants. The other suit was filed against Hubbard's ex-husband, Marvin Binion Sr., and his son, Marvin Binion II. The complaint alleges that the son owns and operates Marvin Binion's Universal Tax & Immigration Service in Hyattsville, Maryland.

The government complaints allege that the defendants prepare fraudulent tax returns for customers containing bogus deductions for items like charitable contributions, unreimbursed employee business expenses, and other miscellaneous expenses. According to the suit, Binion Sr. pleaded guilty in 2007 to filing thirteen false federal income tax returns and was later convicted of making false declarations to a federal court in connection with that criminal tax case. The suit alleges that Binion Sr. was released from prison in May 2012.

The lawsuits allege that Hubbard, Universal Tax Service LLC, and the Binions violate federal law by not signing the returns they prepare for customers and by not placing IRS preparer tax identification numbers on the returns. 

According to the complaints, the defendants prepare customer returns using TurboTax software; place the returns in postage paid, pre-addressed envelopes; and instruct customers to sign and mail the returns to the IRS on their own. The suits allege that defendants do this to hide from the IRS their role in preparing the returns.

The government alleges that Hubbard, Binion Sr. and Binion II generally charge customers a tax return preparation fee of $300 and that the Binions may have earned as much as $30,000 per day preparing fraudulent returns.


Beverly Hills Real Estate Agent Pleads Guilty to Obstructing the IRS

A Beverly Hills commercial real estate agent pleaded guilty January 31, 2013, to preventing the IRS from collecting over $1.7 million in back taxes. Robert Charles Le Moine, sixty-three, of Beverly Hills pleaded guilty before US District Court Judge James V. Selna to one count of obstructing the IRS.

According to the plea agreement, from about 1990 through 2009, Le Moine was a real estate agent based in Beverly Hills engaged in representing buyers in the purchase of commercial properties. During that twenty-year time period, Le Moine filed personal income tax returns reporting substantial amounts of income, averaging approximately $250,000 in adjusted gross income each year. Le Moine made estimated tax payments and voluntary payments totaling $166,905 over two decades. However, Le Moine did not pay the overwhelming portion of taxes due and owing to the IRS. As a result, Le Moine's tax obligation to the IRS is approximately $1,704,728, plus penalties and interest.

The IRS began collection efforts in 1999 and made numerous attempts to collect Le Moine's tax liability and levy his income and assets. However, the IRS' efforts were unsuccessful due to the defendant actively impeding the collection efforts. Le Moine received as income commission checks in substantial amounts, sometimes as high as several hundred thousand dollars from his real estate business. However, as soon as the checks were deposited to his personal bank account, or shortly thereafter, Le Moine withdrew the money by cash or a check payable to cash, himself, his children, or his friends. 

Le Moine also dealt extensively in cash and did not purchase or acquire property or large attachable assets that the IRS could seize, and instead rented an apartment or house and leased cars.

As a result of his guilty plea, Le Moine faces a statutory maximum sentence of three years imprisonment and a fine of at least $250,000. In addition, Le Moine may be ordered by the court to pay the IRS back taxes of approximately $1,704,728 plus penalties and interest. Judge Selna ordered Le Moine to appear for sentencing on June 3, 2013.


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